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Minutes released by the Federal Open Market Committee Wednesday gave a glimpse into the cautiously optimistic discussion that took place during the committee’s January meeting. While most members expect growth to continue, they don’t foresee it being as strong as in recent quarters. “Participants generally noted that economic activity had strengthened more in the second half of 2013 than they had expected at the time of the December meeting,” read the minutes.

An advance GDP estimate from the Bureau of Economic Analysis pegged fourth quarter GDP growth at 3.2%, compared to a 1.9% rate for the full year. Third quarter growth came in at 4.1%. Some members noted that “temporary factors” such as increased net exports and “unusually high” inventory investment “helped boost real GDP.” Most participant, therefore, do not anticipate the escalated pace to continue into the New Year. They instead see the economy expanding more moderately in the quarters to come.

To the extent growth will continue the FOMC expects it “to be supported by highly accommodative monetary policy, a further easing of fiscal restraint, and a modest additional pickup in global economic growth, as well as continued improvement in credit conditions and the ongoing strengthening in household balance sheets.”

“Important issues were discussed at the January FOMC meeting, but few were resolved,” wrote RBS Chief US Economist Michelle Girard in a note following the release. “However, a range of views were expressed as to the form that forward guidance should take, with no consensus emerging over a preferred strategy. Policymakers also appear to believe now that the decline in the labor force pariticipation rate is more structural than cyclical. However, the degree of slack in the labor market continues to be debated. A few participants are growing increasingly uncomfortable with the Fed’s accommodative stance, suggesting rate hikes might be appropriate relatively soon. However, other participants (including Yellen, we presume) believe low rates remain appropriate.”

Consumer spending was particularly strong in late 2013, while surveys suggest hopefulness about future income “households remained cautious” when it came to spending. The housing sector, on the other hand, slowed toward the end of last year but the committee is cautiously optimistic that the sector will pick up thanks to “favorable housing affordability,” low mortgage rates and demographic trends.

Perhaps the most closely watched economic indicators in recent months have been related to the labor market. According to the Bureau of Labor Statistics the economy added 113,00 jobs in January, less than expected for the second month in a row. In December — the most recent month the Fed would be considering in its meeting — just 75,000 jobs were added. The Fed agreed with the prevailing sense that “bad weather” may have contributed to the disappointing results.

As the unemployment rate approaches the 6.5% threshold the Fed has long held, FOMC members agreed “it would soon be appropriate for the Committee to change its forward guidance in order to provide information about its decisions regarding federal funds rate after that threshold was crossed.”

Some suggested that risks to financial stability should also be included in the “list of factors that would guide decisions.”

Echoing sentiments displayed by Federal Reserve Chair Janet Yellen when she testified before Congress earlier this month, the members noted some concern that recent emerging market “developments” could pose a downside risk. They, however, reiterated confidence that risks are more balanced than in prior months and noted that the volatility had a limited impact of U.S. financial markets.

Similarly, it was noted that markets did not fall when the Fed announced plans to begin cutting its asset purchases in December. “However,” the minutes explain, “one participant expressed concern that longer term interest rates could rise sharply if market participants’ expectations of future monetary policy came to deviate from those of policymakers, as appeared to have happened last summer.” Other members “argued that the current highly accommodative stance of monetary policy could lead investors to take on excessive risk and so undermine longer-term financial stability.”

The Fed purchased $85 billion worth of bonds each month for most of 2013 in an effort to stimulate the economy. Following the FOMC’s meeting in June 2013, former Fed Chairman Bernanke unveiled intentions to begin tapering in six to 12 months. At that point investors began to realize that liquidity would be leaving the global economies that had benefited from the Fed’s open pocketbook. The Dow lost more than 200 points that day and the 10-year Treasury note yield jumped to 2.34%. Markets later rallied when the Fed ultimately declined to taper in September and again in October.

In December, the FOMC cut monthly asset purchases by $10 billion, while maintaining tight control on interest rates and citing moderate economic expansion. In January the committee trimmed another $10 billion. On the decision the minutes read, ”In their discussion of monetary policy in the period ahead, all members agreed that the cumulative improvement in labor market conditions and the likelihood of continuing improvement indicated that it would be appropriate to make a further measured reduction in the pace of its asset purchases at this meeting.” Looking ahead, “Members again judged that, if the economy continued to develop as anticipated, further reductions would be undertaken in measured steps.” Again reiterating prior statements.

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